PUBLISHED:February 23, 2023

Scholarship Spotlight: Professor Veronica Root Martinez on improving transparency around corporate monitorships


In a new article published in Harvard Law Review, Martinez, the nation’s leading academic expert on the role of monitors and monitorships, proposes a novel way to increase transparency around the outcomes of corporate monitorships.

Professor of Law Veronica Root Martinez Professor of Law Veronica Root Martinez

In her new article Public Reporting of Monitorship Outcomes, 136 Harvard Law Review 757, Professor of Law Veronica Root Martinez proposes a novel remedy to the longstanding problem of opaqueness surrounding the outcomes of corporate monitorships.

The Department of Justice recently indicated it plans to expand the use of monitors – independent third parties who oversee an institution’s remediation efforts after a finding of misconduct – but the process remains largely unregulated and non-transparent, often with no obligation to report back to the public on whether or not the effort was successful.

In the article Martinez, one of the foremost experts on corporate compliance and the nation’s leading academic expert on the role of monitors and monitorships, prescribes a standardized public reporting mandate that would require monitors to prepare a brief report for the public in addition to the one they provide to the firm and party ordering the monitorship.

Martinez discussed the lack of public transparency in corporate monitorships and her proposals to remedy it in a scholarship Q&A.


You describe a “norm of secrecy” and lack of oversight in the modern era of corporate monitorships. There’s no legal requirement for monitors to issue their remediation reports in writing, and the DOJ has even fought to keep reports confidential. What is the justification for keeping monitor reports out of the public record, even when they concern public welfare?

There are a few different justifications that have been articulated. Corporations often argue that monitor reports contain confidential information—whether that be customer information or trade secret information for the firm. Additionally, concerns have been expressed that a monitor might lose the trust of the employees they need to work with to achieve an effective remediation process if the employees know the reports will be made public. Others argue that the public doesn’t necessarily need the information because there is typically a governmental party involved in the monitorship, and the government is acting in the public’s best interests. And then—of course—there is the often unstated concern that turning over information in a monitor report could lead to third-party litigation, which is a liability firms are very resistant to subject themselves to.


Monitorships seem fraught with potential conflicts of interest and operate in what you call a “regulatory vacuum.” What guidelines are there to keep the process honest?

Some monitorship agreements don’t allow a monitor to have had a previous relationship with the firm being monitored. Additionally, monitorship agreements often include a cooling off period after the monitorship where the monitor cannot represent the monitored firm in additional matters. Importantly, however, not all governmental agencies use these tools to address potential conflicts. The American Bar Association has also issued non-binding Standards for Monitors, which address issues of conflicts of interest. There is nothing to my knowledge, however, that would formally address conflicts of interest for all monitors.


As a remedy you propose that corporate monitors create a separate, additional report for the public. What should be included in a public report, and how should it be made available? And why not just make the reports that monitors already prepare for the firm and government available to the public?

I think the public report should be published at the conclusion of a monitorship. The public report should, at a minimum, be accessible both on the website of the monitored firm, as well as the agency that ordered the monitorship. The proposed report’s primary purpose is to explain the results of the remediation effort the monitor oversaw at the firm. Additionally, the report should make clear the identity of the monitor as well as an attestation from the monitor about the truthfulness of the statements in the public report.

I do not advocate that the reports currently written by monitors be disclosed for a variety of reasons. Primarily, I am concerned that if one required the disclosure of the current reports monitors prepare, you would see significant changes to or elimination of those reports.  Instead of providing the firm and the government a report, you might see monitors begin to provide verbal presentations. Perhaps more importantly, I don’t think the reports monitors provide to the firm or the government will necessarily be easy for the public to digest. We do have court-ordered monitor reports, and they tend to be quite lengthy and highly technical. My article proposes that a report be drafted for the public that the public can understand easily.


In your article you suggest the public report could be mandated through regulatory interventions that would cover most companies – an SEC disclosure requirement and a policy mandate by the Office of Management and Budget. Why this approach, rather than creating permanent transparency requirements for monitorships through legislation or court action?

My article notes that in an ideal world Congress would pass a statute requiring a public report at the conclusion of each monitorship. That said, I think it is unrealistic that we will see congressional movement in this space, so I move on to potential regulatory interventions. I am in favor of any creative (legal) method to get to the outcome outlined in the article – which is providing the public an accounting of the remediation effort that was undertaken during the monitorship term. I’m kind of agnostic as to how that occurs, although I suggest two avenues in the article. As for court intervention, the case law in the area is fraught, with the upshot being that attempts by district courts to intervene have overwhelmingly been rejected by the courts of appeals who have considered these matters based on separation of powers concerns.


What stakeholders have an interest in the results of a monitorship? Might negative disclosures expose a company to liability beyond official government sanctions? Is that overridden by the interest of resolving information asymmetry and potential market distortions?

Typically, when a monitorship is going to be entered into, the public gets a public notification of the underlying misconduct that led to the monitorship. This is often via a press release of some kind.  But the public does not get much information when monitorships conclude. I think the public-at-large is an important stakeholder that deserves access to these reports. Additionally, I think for public companies, shareholders do have reasons to want to know whether the remediation effort was successful. Corporate misconduct is costly to the firm and ultimately to the shareholders, and it is important for firms to adhere to their ethics and compliance obligations. Moreover, I think intermediaries—like reporters and legal services organizations—may also benefit from public reports, as it will better equip them to gauge whether the firm has properly remediated the misconduct or may still have work to do. The public reports could, if negative, possibly create liability. I assume there will be firms that aren’t a fan of my proposal. Right now the public, investors, and intermediaries very often get little to no information at the conclusion of monitorships. If a firm has engaged in wrongdoing that is so severe or pervasive to warrant the imposition of a monitor, it is my view that it should let the public know why they have done what’s necessary to be trusted to act ethically in the future.


As part of its civil settlement over cheating on diesel emissions, Volkswagen went through a three-year monitorship and a public report was made available. What did the report get right and what could be improved? Is there an existing model for the kind of report you propose? Could this kind of disclosure and transparency around remediation efforts help corporations regain public trust after an ethics scandal?

The great thing about the Volkswagen monitorship is that the criminal settlement required public disclosure of its reports, and these reports were made available on a website. Those reports were a bit longer than I would like to see for the public report I propose in the article. I am proposing a very focused report that would tell the public about the firm’s remediation efforts during the monitorship. What did the monitor do? What did the firm do? Why should we trust (or not) this firm going forward? 

Volkswagen officials and its monitor did a number of interviews at the conclusion of the monitorship, and I do think part of the point of those interviews was to help the firm regain public trust. A public report could also assist in this, but I would like to see a report that’s substantive and not just marketing.